ICO Hangover: The $17,000 Fall From Grace

On Sunday 17 December 2017, CME Group, the Chicago exchange where farmers hedge corn and banks hedge interest rates, opened trading in Bitcoin futures for the first time. That same day Bitcoin touched $19,783, according to the price index run by the news site CoinDesk. It had started the year near $1,000. Within twelve months it would be worth $3,122, a fall of 84%, and the thousands of new coins that had been sold to the public on the back of its rise would fare far worse.

The 2017 crash had no single villain. No exchange collapsed on the way up and no hacker triggered the fall. It was a classic bubble: a new kind of investment, an easy way to buy it, a price that only went up, and then a year in which almost everyone who had bought in the final months found out what they had actually bought.

The year anyone could print a token

The engine of the boom was the initial coin offering, or ICO. A start-up wrote a white paper (a business plan with technical diagrams), built a website and sold digital tokens directly to the public in exchange for Bitcoin or Ether, the coin of the Ethereum network. Think of a share issue with no prospectus, no underwriter, no regulator and no shares: buyers usually got no vote, no dividend and no claim on the company, only a token they hoped would be worth more once it was listed on a crypto exchange.

Ethereum made it cheap. Its smart contracts, code that moves money by itself when set conditions are met, let a team create a token in an afternoon. The money that followed was enormous. PwC and the Swiss Crypto Valley Association counted about $7 billion raised through ICOs in 2017 and $13.7 billion in the first half of 2018 alone. Autonomous Research put the two years at roughly $7 billion and $12 billion. Either way, more than $20 billion changed hands in about eighteen months.

The biggest single sale belonged to Block.one, which raised about $4.1 billion over a full year for EOS, a blockchain pitched as a faster rival to Ethereum. Telegram, the messaging app, raised $1.7 billion privately for a network called TON. At the small end, projects with no product and anonymous teams raised millions in minutes. China was the first big country to say no: on 4 September 2017 the People's Bank of China, its central bank, banned ICOs outright, and the country's crypto exchanges were shut within weeks. The money simply moved offshore.

The craze spread beyond crypto. On 21 December 2017 a small New York drinks company called Long Island Iced Tea renamed itself Long Blockchain and its shares jumped several hundred per cent in a day. Nasdaq delisted it within two months, and in 2021 the Securities and Exchange Commission (SEC), the US stock market regulator, charged three people, including its main shareholder, with insider trading ahead of the name change. In January 2018 Kodak announced a "KodakCoin" for photographers. Its shares more than doubled. The coin never meaningfully launched.

How the bubble let the air out

The fall came in stages. Bitcoin lost more than two thirds of its value in seven weeks, dropping below $6,000 on 6 February 2018. Ether, which had been worth just over $1,400 in mid-January, followed it down. The total value of all crypto, which peaked at about $830 billion in early January 2018 according to CoinMarketCap data, kept shrinking for the rest of the year.

Several blows landed close together. On 16 January 2018 BitConnect, a lending scheme that promised investors large guaranteed returns, shut down after cease-and-desist orders from regulators in Texas and North Carolina, and its token lost more than 90% of its value within days. Ten days later hackers stole about $530 million of the NEM coin from Coincheck, a Japanese exchange. On 6 February Jay Clayton, the SEC chairman, told the US Senate: "I believe every ICO I've seen is a security." Facebook banned crypto advertising at the end of January and Google followed in March.

ICO tokens suffered most, because many of them had been bought with Ether. When projects sold their Ether to pay salaries, they pushed the price of Ether down, which lowered the value of their own war chests, which forced more selling. Satis Group, an ICO advisory firm, reviewed the 2017 offerings in a 2018 report for Bloomberg and classified close to four in five of them as scams by number. The money mostly went elsewhere: the projects it flagged as scams had raised about $1.3 billion, a small slice of the total. Most of the money had gone to real teams that simply never built anything worth what buyers paid.

The final leg down came in November 2018. A dispute over the rules of Bitcoin Cash, an offshoot of Bitcoin, turned into an open fight between camps led by Roger Ver and Craig Wright. Prices across the market slid with it. On 15 December 2018 Bitcoin hit $3,122. Total crypto value fell to about $102 billion, down roughly 88% from January. Ether traded below $100.

Who paid

The losses landed on ordinary buyers. Few of them borrowed to buy, so this was not a crash of forced selling like later ones. It was a slow bleed, in which people who had bought tokens at the top watched them fall 90% or more and stay there. Many tokens from 2017 no longer trade at all.

The founders who had raised money in Bitcoin and Ether and sold quickly did well. Block.one sold its EOS tokens over a year while their price was high, and by 2019 it held as many as 140,000 Bitcoin, Bloomberg reported. The EOS network itself never came close to displacing Ethereum.

BitConnect investors fared worst. In February 2022 the US Justice Department charged its founder, Satish Kumbhani, over what prosecutors called a $2.4 billion fraud. He has never been arrested.

The bill arrived later

Regulators took years to catch up. On 30 September 2019 Block.one agreed to pay the SEC a $24 million civil penalty for selling EOS as an unregistered security, without admitting or denying the findings. That was well under 1% of what it raised. In June 2020 a court approved Telegram's settlement: it returned more than $1.2 billion to investors and paid an $18.5 million penalty after the SEC stopped its token from launching. The Canadian messaging company Kik paid $5 million over its 2017 sale.

Bitcoin itself recovered. On 16 December 2020, almost exactly three years after the peak, it passed $20,000 again. By then the ICO was effectively dead in the United States. Token projects raised from venture capital funds instead, or gave coins away in "airdrops", the crypto version of free sample shares.

The story has since come full circle. In March 2025 the EOS network renamed itself Vaulta and swapped its token, with Block.one no longer involved. In November 2025 Coinbase, the largest US crypto exchange, opened a platform for public token sales that ordinary Americans could join, the first such access since 2018 according to the crypto news site The Block. Its first sale was for Monad, a new blockchain. The 2017 boom is now old enough that a new generation of buyers is being offered the same deal, this time with a regulated broker in the middle.